Saturday, August 27, 2011

Breaking News From the Land of Duh - MA Casino Edition

The Globe's front page today has one of those articles that just makes a careful reader want to pound his head against the nearest wall. Titled "Gambling projections for Mass no sure bet," the basic conclusion of the lengthy analysis is that the 2008 gaming-industry-generated "study" on which Massachusetts political leaders are relying for jobs and revenue projections in their latest rush to pass a casino bill, a study that assumes a pre- recession economy and ignores growing gaming competition from surrounding states, might just not be a reliable basis from which to draw reliable numbers.

Well excuse my French, but: No (*Bleeping*) (*Bleep*).

The fact that Governor Patrick, Speaker DeLeo and Senate President Murray doggedly refuse to allow a new study - by an impartial analyst - is but one among many red flags flying up to all sides of the latest gaming bill. But it's a huge one. In a political culture that commissions a study at the drop of a hat, there is but one rational conclusion to be drawn from that refusal: Patrick, DeLeo and Murray know their numbers are crap. Not "suspect." Know.

The first three paragraphs of the Globe piece really say it all:

Massachusetts policy makers are basing their hopes for the gambling market in large part on a consultant’s analysis that views the ongoing recession as an economic blip and assumes consumer spending will resurge by the time casinos are established in Massachusetts.

That study, first produced in 2008 and updated in 2010, also assumes Massachusetts casinos could not only reclaim money state residents now cross the border to bet in Connecticut and Rhode Island, but also entice them to spend much more.

Neither is a sure bet, economic analysts say.

On the other hand, neither is a worse bet than emptying your savings account, converting it to tokens and shoving them one by one into a slot machine in the hopes of landing on easy street.

The article only gets more cringe-inducing from there.

In fact, Moody’s Investors Service issued a special report yesterday warning that Massachusetts casinos will not necessarily attract new gamblers or higher levels of spending. More likely, Massachusetts will compete with casinos in neighboring states for existing gambling dollars and share the take...

Wait. Hold on a second. Do they mean to say the Massachusetts legislature lacks the power to magically suspend the ordinary laws governing free market dynamics? Another of my cherished illusions shattered.

Fact is, ours aren't the only area pols whose thinking is impervious to stubborn reality. New York is also pushing a casino initiative. And last year New Hampshire legislative leaders said that if Massachusetts were to go forward with a casino bill, they'd follow suit. All of these blinder-wearing Pollyannas share the same basic, common-sense-defying assumption: that there exists an infinite supply of untapped new gamblers, and there is no number of casinos that those gamblers will not fill if only someone would build them. Supporting that fantasy they have - you guessed it - numbers generated by the gaming industry. Back to the Globe:

Governor Deval Patrick and legislative leaders finally appear poised to enter the casino market at a moment when the market has changed dramatically and with no new economic analysis to support their plans. Patrick’s economic development secretary cited the 2010 report from a gambling consultant as his evidence that “long-term prospects for gaming success were as promising as they were before the recession.’’

In other news, the farmer has decided to take the doors off his hen house, citing a 2010 report from the Fox Guild as evidence that "long-term prospects for chicken theft have decreased markedly."

It gets better:

That report says the recession is not a significant factor in long-term projections because the consultants “anticipate a return to normal growth patterns.’’ But it goes on to say that the recession could in fact have major consequences for casinos - if casino developers can’t access affordable capital.“These folks are saying, ‘We believe the recession is in the rear-view mirror and we anticipate a return to normal growth patterns,’ ’’ said Gregory Bialecki, state housing and economic development secretary. “But, ‘Let’s keep an eye on the fact that the recession might not be a short-term phenomenon. It might have long-term consequences.’ ’’

Right. And how might we start to realistically gauge those long-term consequences in the context of gaming revenue projections? By, I don't know, slowing the hell down and getting some analysis from someone who does not have a massive financial stake in the pending legislation? Someone who isn't chomping right through the bit in his eagerness to get the damned thing passed as quickly as possible, with as little scrutiny as possible? Crazy, I know. More Bialecki:

Not (yet) MA's Economic Development Secretary

Bialecki said the report is not the only factor giving him confidence. He also cited as evidence a state recovery that has been outpacing the nation’s; encouraging signs that casino spending is beginning to recover; and early interest in the market expressed by casino developers and investors.

So it isn't just casino industry projections that have Secretary Bialecki happily ignoring reality. There's also the parallel fantasy of our robust economic recovery. And "early interest in the market" expressed by the only people poised to make a killing on new casinos. Oh, and a really encouraging fortune cookie he got the other day with his take-out.

As to that "early interest," the Globe correctly notes that all of the interested developers have scaled back their earlier proposals by hundreds of millions of dollars. Hardly an optimistic portent. And about those "encouraging signs that casino spending is beginning to recover"?

Much like the broader economy, the gambling industry has gone through a period of extreme volatility in recent years, with many of the largest operators struggling with diminishing revenues and huge levels of debt.

Those conditions, combined with a risk-averse lending environment, have made it increasingly difficult for gaming operators to get loans to finance ambitious development proposals like those now being rolled out in Massachusetts...

Though revenues nearly doubled at tribal casinos between 2001 and 2007, they have hovered around $26.5 billion since then. Likewise, spending at commercial casinos dropped off in 2007 and inched up only 0.9 percent last year, according to the gaming association, which represents non-tribal casinos.

New England casinos have faced particular hardship. The Twin River gambling complex, which provided Rhode Island its third-largest revenue source, filed for bankruptcy in 2009. In Connecticut, Foxwoods laid off 700 people and faced a 13 percent drop in revenue in 2009 and is still trying to restructure its $2 billion in debt.

The American Gaming Association is hesitant to predict a return to peak revenues and instead warns that a casino comeback still depends on a broad-based increase in discretionary spending.

Yeah. Sounds like the time to go all-in. What's the worst that could happen?

“No matter where you look across America, the government policy to expand gambling has failed to deliver on its revenue promises and its job promises,’’ said Les Bernal, executive director of the national group Stop Predatory Gambling. “It has left us with a smaller middle class and hundreds of thousands of Americans in much deeper debt.’’

That "reality" thing again. The Big Three don't want to hear it.

If you feel like this whole casino bill thing just kind of snuck up on you this time around, you're right. But no matter how hard the Big Three push to get the "debate" over and done with before most people even notice it is happening, it is going to take a couple of weeks at least. That's a couple of weeks for you to call your Reps and Senators and tell them what you think. Find their numbers here and here, and make those calls.

UPDATE: Right after writing this ventilation, I went to the town dump to get rid of some debris and saw this in the scrap metal bin. A portent?

Posted by
Dan

2 comments:

i hope you're wrong about that, Anonymous. If past is prologue, the only way to make our political "leaders" pay attention to reason and logic is to impress upon them that a lot of people are paying attention. I worry that so many people assume this is already a done deal that they won't bother even trying to stop it.

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